Trump raises Canada's steel-aluminium tariffs to 50%, threatens auto industry shutdown

Washington: US President Donald Trump on Tuesday announced steep new tariffs on Canadian steel and aluminium, threatened to "shut down" Canada’s auto industry, and suggested that the trade war could be resolved if Canada became part of the United States.

Trump's shock new threats came hours before a midnight deadline for ramping up the Republican's increasingly global trade offensive.

On his Truth Social platform, Trump announced that he would double planned 25-percent tariffs on steel and aluminum to 50 percent for imports of the metals from Canada.

A 25% levy on steel and aluminium imports from other countries, including Brazil, Mexico, and the UAE, is still set to take effect on Wednesday, further tightening trade restrictions.

The latest tariffs, which do not include exemptions, are expected to significantly affect industries such as automobiles, electronics, and construction, putting pressure on manufacturers to find alternative domestic suppliers.

Among the hardest-hit nations is Canada, historically one of the US’s closest allies and a major trading partner. Ottawa is now locked in an extraordinarily bitter war of words with the Republican, facing constant threats over its sovereignty.

Canada's incoming prime minister Mark Carney struck a defiant note Sunday, vowing to stand up for "the Canadian way of life" and saying Canadians are "always ready" for a fight if needed.

Reacting to Trump's announcement on MSNBC, Ontario Premier Doug Ford said the US president made "an unprovoked attack on our country, on families, on jobs," promising an appropriate response.

Canada supplies half of US aluminum imports and 20 percent of US steel imports, noted industry consultant EY-Parthenon.

Trump said his new supercharged tariffs were in response to Canadian province Ontario's imposition of a 25-percent surcharge on electricity exports to three US states.

Trump said he would be announcing an electricity national emergency in the area hit by the price increases.

He also ramped up his threats, warning that if what he called "egregious" Canadian tariffs are not dropped he would step up tariffs on cars from April 2.

This would "essentially, permanently shut down the automobile manufacturing business in Canada," he said.

Trump has vowed reciprocal levies as soon as April 2, to remedy trade practices Washington deems unfair.

In the same lengthy social media post Tuesday, Trump said the "only thing that makes sense" is for Canada to join the United States as a 51st state.

"This would make all Tariffs, and everything else, totally disappear. Canadians taxes will be very substantially reduced, they will be more secure, militarily and otherwise, than ever before, there would no longer be a Northern Border problem," Trump said.

Former Treasury Secretary Larry Summers said on X that Trump's tariff threats on Canada would be "a self-inflicted wound to the US economy that we cannot afford, at a moment when recession risks are rising."

But if some companies were bracing for a damaging period of higher production costs, others sensed an opportunity.

Drew Greenblatt, owner of Baltimore-based metal product manufacturer Marlin Steel, said incoming levies on imported steel have already boosted his new orders.

"We only use American steel, so we're thrilled with the tariffs," he told AFP, adding that these helped him gain an edge over a competitor that was using Chinese metal imports.

Producers who use foreign sources of steel have warned that higher import costs will ripple through the world's biggest economy.

A major US maker of steel products warned that American steel prices would surge to match the elevated costs of foreign goods.

Supply constraints nudge prices higher, making items like nails, for example, more pricey given that much of their cost is in original steel.

Purchasers in industries like homebuilding would therefore end up spending more money.

They could end up passing these costs on to consumers, making homes even less affordable, the manufacturer cautioned, speaking on condition of anonymity. 

AFP